November 20, 2017
Blockchain has the potential to impact a myriad of fields and sectors thanks because it involves the storage and transfer of data in the form of blocks on a public ledger. Everyone has access to the information and thus it is completely transparent and immune to human manipulation. Moreover, because transactions executed by blockchain development are automated and decentralized, there is far less risk for corruption or human error. Similarly, costly, time-demanding third parties are no longer needed.
These benefits of blockchain will soon impact countless industries, but as of now many are just in early planning or dreaming stages of blockchain development. International trade however not only is a prime example of an operation blockchain can revolutionize. But one that is already benefiting from the breakthrough technology.
The traditional method of mitigating risk when trading across borders involves using a trusted third party. For example a financial institution or government registry that acts as a centralized authority that manages, tracks and records all shipping information. But these central authorities carry certain risks. In addition to the high costs of staffing them with experts. There is always the potential for corruption, inefficiencies and human error. Blockchain has the potential to solve these problems. Because blockchain development removes the need for human control, trade no longer is subject to thieving individuals or simple mistakes. Moreover, the technology allows for the tracking, recording and payment to occur much faster and cheaper.
Blockchain Development In Bill of Lading for Ocean Trade – A Case Study
One of the most promising use cases for blockchain in international trade involves moving goods via ship. Sea freight accounts for 90% of international trade. A paper bill of lading has been the universal shipping document that governs the trade for centuries, and is still pervasive today. It lists what a shipment contains, from where, for whom and at what value. The system however is filled with flaws. Because the bills are paper, they can be easily lost, stolen or manipulated. They can also be transferred without the actual goods changing hands which ushers in rampant abuse and corruption. These possibilities for abuse reduce trust amongst shipping agents, governments and ultimately consumers.
With blockchain development, it may help rectify these trust problems and reduce error and corruption. Because all information regarding a shipment’s content, location and ownership are stored on a decentralized, transparent ledger, everyone involved can verify the expected and delivered goods. The blockchain makes it exceedingly difficult to falsify shipments, evade taxes, or skim profits.
Blockchain also greatly increases shipping speeds for international trade by putting the bill of landing on a public ledger. In the current system, untrusting importers tend to delay payments as long as possible by waiting to receive the goods before making a payment. Conversely, exporters want to avoid the nuisance and expense of an aborted shipmen so they require importers make payments early. This tension-filled reality consistently produces delays and arguments. Because importers and exporters can trust each other when blockchain is employed, they are more willing to send goods before money is received, or vice versa. The facilitation of fast, paperless, secure trades results in faster shipping speeds to everyone’s benefit.
While most of the finance-related applications of blockchain are still being explored or tested in pilot projects and sandboxes. A growing number of trading companies are in the process of incorporating practical blockchain applications in their day to day operations. Marine Transport International (UK) Limited, an international freight forwarder, has started to use a public blockchain to store data recording the verified gross mass of containers. Creating a permanent record which can be accessed by port officials, cargo owners and shippers. Keuhne & Nagel, the largest freight company in the world, is gearing up to use blockchain as a means to prevent theft and verify the genuineness of products. The world’s largest mining firm, BHP Billiton, is developing blockchain solutions to improve its supply chain processes and record movements of rock and fluid samples as well as delivery data, as opposed to using the traditional spreadsheets.
All indications are that blockchain development offers exciting new opportunities to streamline existing shipping and logistics operations. While it remains to be seen how the legal and regulatory environment will need to evolve in order to keep up with the changing face of this industry. All signs point to blockchain playing a pivotal role in international trade. Now is a very exciting time to be involved in blockchain R&D as the world continues to embrace it at a rapid rate.
Infinity Blockchain Labs (IBL) is a visionary R&D company engaged in intermediary and RegTech services employing blockchain technology. We focus on forming alliances with established businesses and regulatory institutions across various industries, as well as providing collaborative incubation for early stage blockchain projects. We aspire to empower Vietnam to become a global leader in blockchain. And therefore are committed to sharing information to nurture a passionate, educated blockchain community. Therefore we are delighted to discuss how blockchain can impact international trade and other facets of people’s lives.
You can learn more about Infinity Blockchain Labs and stay current with our activities. Visiting our website and social media accounts below:
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Contact: Nicole Nguyen PR@blockchainlabs.asia
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